A healthy increase in economic activity for the second quarter in a row has prompted local economist Michael Toma to forecast continued improvement for the Savannah metro area through the middle of 2013.

Nearly across-the-board employment gains, coupled with tourism growth and solid port activity propelled the economy in the third quarter, according to Toma’s Economic Monitor.

The Monitor, prepared quarterly by the Armstrong Atlantic State University Center for Regional Analysis, which Toma directs, was released today.

The coincident index — which measures the current heartbeat of the region — grew a healthy 1.25 percent, Toma said. In addition to the coincident index, the leading index, which offers a short-term forecast of the region’s economic activity for the next six to nine months — rose 1.4 percent, capping the fastest three-quarter pace of improvement in three years.

Employment gains took center stage in the third quarter.

“Employers in the region went on a hiring binge during the third quarter, adding 3,100 jobs and raising total employment in the metro area to a seasonally adjusted 153,800,” Toma said.

The gains were on the service side of the economy, he said, with the health/education sector adding 1,000 jobs and leisure/hospitality up 800, while business/professional services and retail sales each added 500 jobs.

The growth was almost entirely on the private side of the economy, with nearly every major sector expanding its workforce, Toma said.

Government employment held steady during the quarter, while the goods-producing side of the economy treaded water, holding at 20,200 workers. Manufacturing added 100 workers, growing to 14,600, while construction lost 100 jobs, falling to 5,600.

“Jobs are definitely the big story this quarter,” Toma said. “A growth of nearly 2 percent in one quarter is really significant.”

While that would annualize to somewhere around 8 percent a year, Toma did not anticipate that growth rate holding steady.

“Basically, I think much of the restraint in hiring earlier this year was unleashed in the third quarter,” he said. “I don’t anticipate a jump as substantial as 2 percent every quarter. Instead, I think we’re moving into a different growth cycle, where we’ll see 1- to 2-percent growth a year, rather than zero to a half-percent.”

Tourism also continued its solid run through the year, with hotel/motel tax receipts up 4 percent for the quarter, running 7-percent ahead of 2011’s year-to-date pace.

Employment in the hospitality sector increased to 20,800 workers and ridership on the trolleys and tour buses is up 6 percent from last year.

“The seasonally adjusted number of new residential homes permitted for construction increased sharply, rising 34 percent over the previous quarter,” he said, adding that the 295 permits issued represented the highest quarterly total in four years.

“Permit issuance is 15 percent over last year’s pace and is on track for 2012 to be the best year since 2008.”

Mark Konter, president of the Home Builders Association of Greater Savannah, said his organization is seeing a “reasonably smooth upturn on both the production and sales sides.”

“Permits and closings have been rising all year,” said Konter, principle of Konter Homes, one of Savannah’s longest-running homebuilders.

“It’s what we like to see — a controlled, steady rise that represents sustainable growth.” Toma agreed, adding the Savannah area should expect continuing improvement in the economy into the second quarter of 2013. Assuming, that is, “the President and Congress don’t engage in a little ‘Thelma and Louise’ economics by driving over the fiscal cliff together.”

The absence of a resolution that avoids the automatic tax increases and expenditure reductions would almost certainly throw the country back into a recession, he said, citing AASU economist and colleague Nicholas Mangee’s estimation that the provisions embedded in the fiscal cliff amount to a reduction in the economy of roughly $600 billion, or 4 percent of GDP.

It’s a scenario Toma hopes we won’t see.

“If I had to guess, I think recognition of the potential damage the fiscal cliff would do will likely cause those in charge to at least put a Band-Aid on the problem until a long-term solution can be hammered out,” he said.

The Coastal Empire Economic Indicators are designed to provide continuously updating quarterly snapshots of the Savannah Metropolitan Statistical Area economy. The coincident index measures the current economic heartbeat of the region. The leading index is designed to provide a short-term forecast of the region’s economic activity in the upcoming six to nine months.

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